Phillips Edison Reveals Top Retail Shopping Center Trends of 2019

The company’s National Accounts and Emerging Trends team provides
industry insight at ICSC’s RECon in Las Vegas

May 20, 2019 09:00 AM Eastern Daylight Time

CINCINNATI--(BUSINESS WIRE)--Phillips Edison & Company (“PECO” or the “Company”), an
internally-managed real estate investment trust (“REIT”) and one of the
nation’s largest owners and operators of grocery-anchored shopping
centers, released today its industry insights on trending themes as part
of ICSC’s RECon event in Las Vegas.

The insights were produced by PECO’s National Accounts and Emerging
Trends team, which consists of a group of highly specialized leasing
professionals that tracks over 400 accounts and actively engages with
150 growing retailers. This team travels the country meeting with brands
to learn how they are evolving to identify creative ways that PECO can
advance their real estate objectives. In the process, the team closely
tracks and documents developing trends across different retail
categories including grocery, restaurant, fitness, health and beauty,
medical, entertainment, and discount.

This deliberate information gathering approach has proved extremely
beneficial to PECO since the team was formed in 2016. In addition to
collecting a copious amount of data that is constantly informing the
Company’s leasing strategies as well as how, where and when it chooses
to deploy capital, the team’s efforts have resulted in new and stronger
relationships with a wide range of innovative retailers that are
redefining the retail landscape and customer experiences. These
activities are driving strong leasing momentum, putting the National
Accounts Team on pace to execute more than 100 new leases in 2019 – up
35 percent year-over-year – and resulting in more than $6 million in
annualized base rent, according to Mike Conway, Vice President of
National Accounts & Retail Partnerships at PECO.

As part of its ongoing research and conversations, PECO finds that many
brands are prioritizing convenience as well as introducing smaller store
formats to drive engagement and satisfaction. These decisions have been
heavily informed by data collected by retailers related to shopping
patterns. For instance, consumers continue to show a preference for
curbside pick-up, mobile check-out, same-day delivery and personal
point-of-sale systems that make the process of shopping in-store faster
and more efficient. Moreover, decisions to launch smaller store concepts
are in part predicated on providing shoppers with a greater level of
convenience in a more intimate setting. This trend is also a response to
increasing urbanization as more people are choosing to live in cities.

Commenting on retailers’ growing use of data, PECO’s Director of
National Accounts - East Ryan Mitzel stated, “There is no question that
data is king. Retailers have more resources than ever to efficiently
gather and analyze information that helps them better tailor their
offerings to their consumers. This information is also being leveraged
during the site selection process to help brands determine precisely
where they need to be – down to the hard corner.”

What follows is an overview of the emerging trends that are sweeping the
retail landscape, and the brands that are leading the charge:

Convenience is King. Convenience continues to trend with
grocers implementing a counter-intuitive movement to get customers in
and out quickly. Walmart announced it would allow customers to return
items to concierge employees at the front of their stores rather than
waiting in lengthy return lines. Grocer Stop & Shop has implemented a
mobile-checkout feature to 23 Chicago-area stores, which allows
customers to completely skip the checkout and any human interaction.
Kroger is also merging tech with convenience, “rolling out” autonomous
delivery vehicles. The grocer is launching the fleet in the Houston
market and plans to aggressively expand the concept by the end of the
year.

Small is the New Black. Several major retailers and
larger-format concepts are testing a decreased footprint. Aldi UK has
implemented “Aldi Local” in London, which totals 6,500 square feet.
Although the company insists the new store does not indicate a push
into the convenience store sector, it could signal an expansion of the
smaller store format. Another concept on the small-scale “fore-front”
is golf entertainment venue Topgolf, which is opening small-format
locations to help the brand “swing” into small and midsize markets.
Finally, Whole Foods is not delivering its “whole” package at its new
store dubbed “Daily Market” in the Chelsea neighborhood of Manhattan.
The store is dedicated to grab-and-go food and travel items, and
includes self-checkouts for the extra-busy New Yorker.

Healthy Living = Healthy Retail. Brands focused on providing
health and wellness services that were traditionally located in office
buildings – such as dental practices, physical therapy providers and
medical imaging centers – are relocating to or expanding into
grocery-anchored shopping centers. These properties represent a
natural fit for the expanding medical retail category as health and
wellness continues to factor heavily into consumer spending decisions.
By locating in necessity-based shopping centers, medical retailers
benefit from high levels of foot traffic while consumers gain more
convenient access to the necessary services they provide. PECO has
executed leases with ATI Physical Therapy, Benchmark Physical Therapy,
SimonMed, America’s Best Eyeglasses, Pacific Dental and StretchLab,
among others, and the company anticipates that 15 to 20 percent of the
leases it executes in 2019 will be medical-related – a significant
increase over previous years. PECO also notes that the CBD retail
industry, which touts cannabidiol’s potentially positive health
effects such as reducing anxiety and alleviating headaches, has seen a
meteoric rise to prominence as major specialty retailers have spread
across the country and CBD-related products have made their way onto
the shelves of established retailers including CVS, Walgreen’s and
Ulta.

Ashley Casey, PECO’s Director of National Accounts – West, stated,
“While the so-called ‘retail apocalypse’ has failed to fully
materialize, what has proven to be true is that we’re in the midst of an
exciting retail evolution, as retailers who fail to evolve are dying and
making room for more creative, innovative concepts to take their places.
As we noted last year, we continue to see growth in the number of
internet-based retailers opening physical locations – including Casper,
Warby Parker, Peloton and Untuckit – which we believe validates the
brick-and-mortar model.”

For more insight from the Emerging Trends team, visit Phillips Edison’s
booth (S233 Q Street, South Hall) this week at RECon in Las Vegas and
connect with the Company on Instagram,
Twitter
and LinkedIn.
Also, listen to Retail
Intel, a podcast series hosted by Mike Conway.

About Phillips Edison & Company

Phillips Edison & Company, Inc. (“PECO”), an internally-managed REIT, is
one of the nation’s largest owners and operators of grocery-anchored
shopping centers. PECO’s diversified portfolio of well-occupied
neighborhood shopping centers features a mix of national and regional
retailers selling necessity-based goods and services in fundamentally
strong markets throughout the United States. Through its
vertically-integrated operating platform, the company manages a
portfolio of 338 properties, including 300 wholly-owned properties
comprising approximately 34.1 million square feet across 32 states (as
of March 31, 2019). PECO has generated strong operating results over its
27+ year history and has partnered with leading institutional commercial
real estate investors including TPG Real Estate and The Northwestern
Mutual Life Insurance Company. The Company remains exclusively focused
on creating great grocery-anchored shopping experiences and improving
the communities it serves one center at a time. For more information,
please visit www.phillipsedison.com.